Euro Zone Crisis: China’s GDP, Bank Fraud and Muscadet

Despite Moody’s downgrading Italy’s credit rating, further details of Spain’s austerity measures emerging and civil servants taking to Madrid’s streets in protest of pay cuts and longer work hours (plus plans for public sector workers to strike in September) — not to mention news of possibly more than $7 billion pre-tax losses at JP Morgan which traders may have intentionally tried to mask — European markets closed the week on a positive note with all stock indices up. The Dow Jones also rose.

The reason that global markets shrugged off some less than stellar developments in a week when the euro fell to a two-year low was that China’s second quarter gross domestic product was 7.6 percent, a slowdown (the slowest in three years) but something that was expected.

Also perhaps not unexpected: The troika of the International Monetary Fund, the European Commission and the European Central Bank has found that Greece has missed 210 of its 300 targets to show that it is on track in making structural changes to its finances, in order to receive bailout funds. Greece’s government has been seeking to extend the timeframe in which it must meet such targets but the likelihood of this is fading. The phrase “the risk of Greece leaving the euro zone” is again being heard.

France is moving forward with austerity measures with Socialist President Francois Hollande and his officials taking a “downgrade” in “luxuries” from the so-called “bling-bling” tone of his predecessor, Nicolas Sarkozy:

  • Hollande has taken the train (instead of the state jet) to Brussels and ordered his ministers to do the same and, when possible, to fly coach class on commercial airlines.
  • Muscadet (termed an “affordable” white wine) is being served instead of Champagne at receptions.
  • The presidential Citroën C6 has been traded in for a not exactly modest Citroën DS5 diesel hybrid. (But, a hybrid nonetheless and housing minister Cécile Duflot has ordered four official bicycles.)
  • Ministerial salaries have been cut by 30 percent (so the President receives $18,000 a month from $26,000).

These cuts are, for the most part, symbolic, as Valérie Pécresse, the budget minister under Sarkozy, has pointed out. France’s total debt is nearly 90 percent of its GDP and far more stringent steps must be taken.

But Hollande’s government is using the cuts to give a taste of more to come, including a new law that would cut the pay of the bosses of state-owned companies “to about 20 times that of the lowest-paid employee, or about $550,000 a year.” So Henri Proglio, the chief executive of Électricité de France, could receive about a third of the $1.9 million he reportedly makes a year (his current salary is some 64 times that of the company’s lowest-paid employee).

Imagine if CEO salaries all had to be “about 20 times that of the lowest-paid employee.” Yes, complete fantasy but after you hear about the new fraud inquiry at JP Morgan and the false reporting of rates by Britain’s Barclays Bank, it is not hard to think that some kind of change to the system is in order.


Related Care2 Coverage

Euro Zone Crisis: The Body Part Black Market

Euro Zone Crisis: What More Austerity Means

Euro Zone Crisis: Why Finance Ministers Stay Up All Night


Photo by Tomas er via Wikimedia Commons


Darren Dagg
Darren Dagg5 years ago

since the Canadian Harper regime keeps cutting funding to social programs while increasing military/policing/prison spending (in a country that has a crime rate that has steadily DECLINED over 20 years) one wonders why - since according to Harper we're still under "economic stress"- he and his sheep cabinet aren't taking pay cuts and train rides as want to show the country you're on our side then show us you're willing to do the same things your citizens do daily....

Jonathan Y.
Jonathan Y5 years ago

Good news. Austerity should not be only for the poor and public employees, however. When entire economic systems are destroyed by incompetent banks and bankers, their charters should be rescinded and their assets sized. Then we could balance our budgets.

Chambertin or Claret are good solid mid-price wines. Muscadet sounds too much like Muscatel, panhandler/troll wine - trop gauche, meme pour un President de la Gauche!

Lynn Squance
Lynn Squance5 years ago


together with Barclay's unaccurate reporting of LIBORs, made me think of this again. This covers a lot of territory so you could be easily put off in the beginning.

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Lynn Squance
Lynn Squance5 years ago

France, with Fraçois Hollande at the helm, is making some great moves that should have been done earlier, but would never have stood a chance with Sarkozy. Hollande is leading by example. As he progresses in his term as president, he will identify more ways, not just to cut spending, but to lift France out of its financial and social mess. Let's face it, he has only been in office 6 weeks.

Could the same be done in the US? I'd like to think so but good luck getting any salary changes through the Congress --- talk about an attitude of entitlement! Gold plated pensions and healthcare on top of excessive salaries as far as I'm concerned. Too bad that Congress is not paid on a merit base (how much you accomplish for the American people) with a cap. Being in Congress should be seen as service to the country, not as a way to feather one's nest.

Bev Oda, a cabinet minister in PM Harper's government (one of his harlots) until she recently resigned her seat in Parliament, was known for excessive spending --- what was the joke, $18 dollars or some equally absurd amount for a glass of OJ. I think she needs to spend time, as should Harper, with François Hollande and see what can be done.

As to JP Morgan Chase, look out!

Here is a video that was on another post, which I found, if nothing else, thought provoking. The reference to JP Morgan Chase's financial fraud and purchase (as part of a group) of the Tribune Co, together with Barclay's unaccurate repor

Kasia Y.
Kasia Y.5 years ago

I think 20 times the minimum wage is a good maximum wage. Any earnings above that could be simply redistributed to maintain civilization.

There should also be a very strict maximum on political donations, and religious organizations should be removed from charitable status since they are merely fronts for terrorist groups (christian and muslim alike).

J.L. A.
JL A5 years ago

Kudos to France for seeking to restore an appropriate economic balance between CEO earnings and the typical workers in organizations--ensuring that becomes the norm worldwide would do much to solve the global economic problems and restore an improvement trend for all.

Past Member 5 years ago

As for the difference between the euro and the American dollar, that's merely the exchange rate, which fluctuates daily. Even before the euro came about, European currency was typically (this does not mean always) worth more than American currency. Different cultures, different valuations on products.

Past Member 5 years ago

Wendell H., you really need to go back and study history. While America was suffering through the first Great Depression, Germany was in an even worse economic depression still. It was that depression which helped that monster Hitler rise to power. (While history refers to WWII Germany as "Nazi Germany," that would be like calling America during GW Bush's time in office "Republican America." The Nazis were in fact a political party in Germany prior to WWII, and it was the Nazi party which gained control of Germany to install Hitler and be led by Hitler. Just as not all Americans are Republicans, not all Germans supported Hitler or his policies. Unfortunately, with the exception of the ones helping to run the underground, that vast majority of those detractors ended up in the same concentration camps as the Jewish and homosexuals.) Thankfully, Germany has taken a great many strides to make certain that atrocities like those that occurred under Hitler will never happen again.

Edith B.
Edith B5 years ago

Pat L. and Marilyn L. you said everything I wanted to say. Thanks!

Marilyn L.
Marilyn L5 years ago

These may be symbolic changes but at least the people see those that govern taken some of the hit also. I think our Congress people should take at least a 20% cut as should the President. All the administration should also take 20% cuts. We need regulations that will not only bring back the tough regulations of the 1930's, we also NEED fairness regulations. There SHOULD BE regulations/laws that govern how much executives and owners can make, all companies should have to do profit sharing and not only with managerment employees, all companies should have to have funds in reserve for hard timesand it should be harder to fire someone close to retirement age after so many years in service, etc. It is plain as the noses on our faces, most businesses do not play fair and they never all will so it MUST be regulated.

It's good to see France moving in the right direction.